The Asymmetric Effects of Exchange Rate Fluctuations: Theory and Evidence from Developing Countries, Issues 2000-2184
International Monetary Fund, 2000 - Anticipations rationnelles (Théorie économique) - Pays en voie de développrment - Modèles économétriques - 32 pages
The paper examines the asymmetric effects of exchange rate fluctuations on real output and price in developing countries. The theoretical model decomposes movements in the exchange rate into anticipated and unanticipated components. Unanticipated currency fluctuations determine aggregate demand through exports, imports, and the demand for domestic currency, and determine aggregate supply through the cost of imported intermediate goods. The evidence indicates that the supply channel leads to output contraction and price inflation in the face of unanticipated currency depreciation. In contrast, the reduction in net exports determines output contraction without reducing price inflation in the face of unanticipated currency appreciation.
What people are saying - Write a review
We haven't found any reviews in the usual places.
Other editions - View all
aggregate demand aggregate supply Algeria anticipated and unanticipated anticipated demand shifts asymmetry Colombia contribution of exchange cost of imported Costa Rica countries under investigation currency depreciation Cyprus decreases the output deflation demand and supply devaluation developing countries Economic Ecuador effective exchange rate effects of exchange Egypt empirical model 15 energy price shocks equation estimating the empirical exchange rate fluctuations exchange rate shocks face of currency face of unanticipated foreign currency Ghana growth and price Guatemala Honduras imported intermediate increase price inflation India Iran Jordan Kandil Kenya Korea labor Malawi Malaysia money demand money supply Morocco negative and statistically negative exchange rate negative shock Nepal nominal output and price output contraction output supplied Peru positive and statistically positive shock price of foreign rational expectations real effective exchange real output growth response of price shocks is evident Sri Lanka statistically significant response supply channels Syria Turkey unanticipated currency appreciation unanticipated depreciation variability of exchange